Support.com 2007 Annual Report Download - page 47

of marketable securities largely offset by the purchase of $91.5 million of marketable securities and the purchase of $963,000 of property and equipment.
Financing Activities
Net cash generated by financing activities was $4.8 million for 2007, $3.1 million for 2006, and $2.1 million for 2005. In 2007 and 2006, cash generated by
financing activities was primarily due to the exercise of employee stock options and the purchase of common stock under the employee stock purchase plan of
$4.8 million and $3.1 million, respectively. In 2005, net cash generated by financing activities was primarily due to the exercise of employee stock options and
the purchase of common stock under the employee stock purchase plan of $3.1 million, offset by $922,000 of common stock repurchases by the Company.
Working Capital and Capital Expenditure Requirements
At December 31, 2007, we had stockholders' equity of $120.9 million and working capital of $109.3 million. Included as a reduction to working capital is
short-term deferred revenue of $10.1 million, which will not require settlement in cash, but will be recognized as revenue in the future. We believe that our
existing cash balances will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months.
If we require additional capital resources to grow our business internally or to acquire complementary technologies and businesses at any time in the future,
we may seek to sell additional equity or debt securities. The sale of additional equity or debt securities could result in more dilution to our stockholders.
Financing arrangements may not be available to us, or may not be available in amounts or on terms acceptable to us.
As noted above, we plan to make substantial investments in our business during 2008, including but not limited to such areas as (i) cost of services, (ii) sales
and marketing, (iii) capital expenditures. We believe these investments and others are essential to creating sustainable growth in our business in the future.
Because these investments will likely precede any associated revenues, we expect our working capital to decrease in the near term. Additionally, we may choose
to acquire other businesses or complimentary technologies to enhance our product capabilities and such acquisitions would likely require the use of cash.
At March 11, 2008 and December 31, 2007 we had investments in AAA-rated auction-rate debt securities with various state student loan authorities of
$25.3 million and $38.9 million, respectively. At the time of our initial investment and through the date of this Report, all of the securities we have invested in
are rated AAA, the highest rating issued by a rating agency, and the student loans made by these authorities are substantially guaranteed by the federal
government through the Federal Family Education Loan Program (FFELP). Auction-rate securities are long-term variable rate bonds tied to short-term interest
rates and are classified as current assets. After the initial issuance of the securities, the interest rate on the securities is reset periodically, at intervals established at
the time of issuance (e.g., every seven, twenty-eight, or thirty-five days; every six months; etc.), based on market demand for a reset period. Auction-rate
securities are bought and sold in the marketplace through a competitive bidding process often referred to as a "Dutch auction". If there is insufficient interest in
the securities at the time of an auction, the auction may not be completed and the rates may be reset to predetermined higher "penalty" or "maximum" rates.
Following such a failed auction, we would not be able to access our funds that are invested in the corresponding auction-rate securities until a future auction of
these investments is successful, new buyers express interest in purchasing these securities in between reset dates, issuers establish a different form of financing to
replace these securities, or final payments become due according to contractual maturities. Given the current negative liquidity conditions in the global credit
markets, in February and March 2008 auctions failed for all of the
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Source: SUPPORTSOFT INC, 10-K, March 13, 2008